Correlation Between Pfizer and Power Assets
Can any of the company-specific risk be diversified away by investing in both Pfizer and Power Assets at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Pfizer and Power Assets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Power Assets Holdings, you can compare the effects of market volatilities on Pfizer and Power Assets and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Pfizer with a short position of Power Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Power Assets.
Diversification Opportunities for Pfizer and Power Assets
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pfizer and Power is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Power Assets Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Assets Holdings and Pfizer is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Pfizer Inc are associated (or correlated) with Power Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Assets Holdings has no effect on the direction of Pfizer i.e., Pfizer and Power Assets go up and down completely randomly.
Pair Corralation between Pfizer and Power Assets
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Power Assets. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.86 times less risky than Power Assets. The stock trades about -0.05 of its potential returns per unit of risk. The Power Assets Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 527.00 in Power Assets Holdings on August 31, 2024 and sell it today you would earn a total of 123.00 from holding Power Assets Holdings or generate 23.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 70.59% |
| Values | Daily Returns |
Pfizer Inc vs. Power Assets Holdings
Performance |
| Timeline |
| Pfizer Inc |
| Power Assets Holdings |
Pfizer and Power Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Power Assets
The main advantage of trading using opposite Pfizer and Power Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Power Assets can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Power Assets will offset losses from the drop in Power Assets' long position.| Pfizer vs. Johnson Johnson | Pfizer vs. RLJ Lodging Trust | Pfizer vs. Aquagold International | Pfizer vs. Stepstone Group |
| Power Assets vs. Maxim Power Corp | Power Assets vs. Pampa Energia SA | Power Assets vs. NRG Energy | Power Assets vs. Vistra Energy Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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